Norwegian Maritime Use of LNG

Expanding the Twin Ports Energy Cluster to include LNG and CNG Production and DistributionDr. Richard Stewart, Co-Director-GLMRIMay 21, 2014

1Natural Gas (NG) Study Overview

The U.S. Maritime Administration (MARAD) funded studies on conversion of the U.S. flag fleet to natural gas (NG) by GLMRI through a Cooperative Agreement established in August of 2011.

Additional support has been provided by the Lake Carriers Association members, the U.S. Coast Guard , the natural gas industry, Twin Ports economic development agencies and businesses.

Extensive literature review: Studies, presentations, websites, and video clips concerning the use of CNG & LNG for all modes and general information is available online at www.glmri.org

General Study Findings for the Great Lakes Region

The Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) supply chains for all modes of transportation is in its infancy.

The NG industry is interested in expanding the supply chain. There is a lack of liquefaction plants to make LNG.

Rail and marine lag trucking in fueling locations. Marine and rail are likely to use LNG rather than CNG. Both modes looking to convert.

Adoption by multiple modes/user groups can further reduce costs.

Facts For ConsiderationThere is a large supply of domestic natural gas.Diesel costs are trending upward and there is a significant price differential with NG.Harmful air emissions are less with NG than diesel but NG is not the only option to reduce air emissions.Scrubber technology for diesel enginesCompanies that use NG will need a robust safety culture.

Price Stability

Energy spot prices2012 dollars per diesel gallon equivalentHistoryProjections2013Retail LNGRetail dieselRetail CNGSource: EIA, Annual Energy Outlook 2014 Early ReleaseFacts For ConsiderationLNG or CNG selection will be on a case by case basis driven by availability and asset utilization.Adoption by multiple user groups will expand the supply chain and realize economies of scale.Building the NG supply chain will take time, capital and public private partnerships.

Incentives for Fuel ChangeGovernment:Financial incentivesGrants DOT, EPATax incentives state, federal, localSafe but reasonable regulationsSupport for Technology transferEducation and outreach suppliers, users, publicResearchIndustry:EconomicsShippers support for greening supply chain

The MOU between multiple states created to support CNG development can be a prototype for supporting LNG development. http://www.naspo.org/documents/RFI12NASPO0001JW_Exhibit_A.pdf Oklahoma CNG GrowthSince 2008940%: growth in natural gas consumption300%: growth in natural gas vehicles390%: growth in CNG fueling infrastructure$1.79: OnCues current CNG price per gallonOver 80: Oklahoma public CNG stations

In 2013$5,000,000+: OnCue customer savings vs gasoline/diesel

2014 Projected$6,000,000+: Customer Savings

Source: OnCue Express HQ: 916 N Main Street Stillwater, OK 74075 April 2014

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Wyoming LNG Roadmap initiated by Governor Matt Mead who is Leading the Charge.Goals:Reduce costs of ownership through lower fuel costsReduce emissions of critical pollutants and greenhouse gasesDiversify Americas fuel mix by using an abundant domestically produced energy source

Population comparison in millionsWyoming .53 Wisconsin 5.74 Minnesota 5.42A Natural Gas Pathway for the Twin PortsEducate all parties of the opportunities and challenges in adoption.Research and development to facilitate change.Establish safe and reasonable regulations.Foster and grow public private partnerships.Create energy corridors to move LNG and CNG from the Twin Ports hub to markets.

Potential of a Liquefaction Plant in the Existing Duluth-Superior Energy ClusterPotential NG/LNG customer base: 100 miles radiusMarine Rail TransitMining Trucking AgricultureOther industries using diesel, heavy fuel or propane and are off the gas pipeline grid.Delivery to other users by container, truck, rail or water.Twin Ports LNG Liquefaction Plant Marketing Region250 mile drayage in a hub and spoke system

250-Mile Radius of Duluth and Chicago

4.3 Million People MiningMarine TransportationTransitRail TruckingOff the pipeline gridAgriculturePotential Great Lakes Liquefaction Plant Locations with a 250 mile dray radius

In SummaryLNG is a viable fuel alternative with cost, security and environmental benefits. Safe operation is critical for adoptionThere are conversion costs and suitability issuesAdoption by large user groups will expand the supply chain.The supply chain is being developed.The Twin Ports has potential to expand its role as an energy cluster and be a hub for LNG/CNG production and distribution.

Thank you to All the Sponsors

Photo by Chris J. BensonChart11.558316199519951.694859199619961.614278199719971.387704199819981.488541199919991.942142200020001.785293200120011.645775200220021.847121200320032.152323200420042.763017200520053.009781200620063.111805200720074.014647200820082.581486200920093.092616201020103.887517201120113.945823201220123.879272.49075823341.91724829693.683332.48788728211.90783042823.5441322.49211610641.90553535933.4952232.51279960521.90784083073.497142.53737252941.92349811893.5338682.58623515241.95780972493.6106162.59702185141.95947065743.6718752.57414703131.93775398233.7407022.58780093671.95087500233.8157662.58684834511.95062534233.8680042.59577424491.9599932793.9180832.614009551.98259416663.9770052.6223412592.00128260464.0242742.62020694342.01079686984.082972.62615772822.02379430814.1170922.63616951032.04543539174.1632592.65863877162.07691515984.2040752.68702761022.10941451164.2528472.6944513892.11262416834.3042552.69950797492.08934365074.3584012.71970921382.10437276664.4291452.73503847652.11336191364.4670752.75475107532.13015570964.5093692.78738066642.15728542964.5427552.78938058172.16372859944.5833262.78981235482.17160897864.6529952.81370994872.20931152224.7311022.84453352712.2537199334

Highway DieselFleet LNG for trucksFleet CNG for trucks

Sheet1Column11995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040Highway Diesel$1.56$1.69$1.61$1.39$1.49$1.94$1.79$1.65$1.85$2.15$2.76$3.01$3.11$4.01$2.58$3.09$3.89$3.95$3.88$3.68$3.54$3.50$3.50$3.53$3.61$3.67$3.74$3.82$3.87$3.92$3.98$4.02$4.08$4.12$4.16$4.20$4.25$4.30$4.36$4.43$4.47$4.51$4.54$4.58$4.65$4.73Railroad Diesel$3.10$2.95$2.84$2.80$2.80$2.83$2.89$2.94$2.99$3.05$3.09$3.13$3.18$3.22$3.27$3.29$3.33$3.36$3.40$3.44$3.49$3.54$3.57$3.61$3.63$3.67$3.72$3.78Fleet LNG for trucks$2.49$2.49$2.49$2.51$2.54$2.59$2.60$2.57$2.59$2.59$2.60$2.61$2.62$2.62$2.63$2.64$2.66$2.69$2.69$2.70$2.72$2.74$2.75$2.79$2.79$2.79$2.81$2.84LNG for rail$1.48$1.48$1.50$1.52$1.55$1.61$1.64$1.62$1.64$1.64$1.66$1.69$1.70$1.70$1.71$1.73$1.75$1.79$1.81$1.83$1.86$1.88$1.91$1.96$1.97$1.97$2.00$2.04Motor Gasoline$1.65$1.73$1.69$1.43$1.55$1.99$1.86$1.73$1.96$2.26$2.68$2.94$3.10$3.52$2.53$2.95$3.65$3.69$3.57$3.38$3.18$3.07$3.03$3.02$3.03$3.08$3.12$3.17$3.22$3.26$3.29$3.32$3.36$3.37$3.40$3.43$3.46$3.50$3.54$3.62$3.65$3.69$3.73$3.77$3.83$3.90Fleet CNG for trucks$1.92$1.91$1.91$1.91$1.92$1.96$1.96$1.94$1.95$1.95$1.96$1.98$2.00$2.01$2.02$2.05$2.08$2.11$2.11$2.09$2.10$2.11$2.13$2.16$2.16$2.17$2.21$2.25